A company sells an office building that has appreciated in value and subsequently leases the space.Which of the following scenarios represents an impact that sale-leasebacks may have on corporate financial statements?

Question

Quizplus · Accepted Answer

The sale of the office building will result in a gain on sale, which will increase taxable income in the year of sale. This will impact the company's financial statements, as the increased taxable income will be reflected in the income statement. Sale-leaseback transactions do not affect earnings per share or the deductibility of lease payments. While there may be tax implications related to capital gains tax, this is not directly related to the impact on corporate financial statements.

A Company Sells an Office Building That Has Appreciated in Value